News that a U.S. company will shut down its paper-making mill in southern Cape Breton – potentially killing thousands of jobs and tearing the heart out of Port Hawkesbury’s economy – has sparked a desperate search for a solution.

It’s an old story in Atlantic Canada: A foreign-based employer vanishes from a depressed region, removing crucial jobs and sparking a flurry of reaction as politicians and civic boosters try to find a way to convince them to stay.

But what’s gone usually proves to be gone for good. And critics are increasingly questioning the viability of sustaining the economy in poorer areas through tax cuts, investments, grants and other government inducements.

“While I applaud the efforts to try to save the mill, the taxpayers of Nova Scotia simply cannot pour millions of dollars into a money-losing operation,” Rick Howe, host of a popular Halifax radio show, wrote at his blog Rick’s Rants.

At risk in the latest crisis is the future of a pair of paper-making machines at a mill in Port Hawkesbury, N.S.

The American owner, NewPage Corp., announced this week that both machines would be idled next month. The company, which has been struggling with a crushing debt load, a high Canadian dollar and declining demand for newsprint, said the mill had not been profitable for more than a year.

The indefinite shutdown will affect 600 plant workers and another 400 cutters and truckers. According to Billy Joe MacLean, the mayor of Port Hawkesbury, a further 2,000 jobs indirectly reliant on the mill will also be hit.

“I can’t think of a more difficult position for the families that will be affected by this decision,” Premier Darrell Dexter said shortly after the shutdown was announced. “We want to make sure this kind of event is as short as possible.”

The news shocked his government into action. Mr. Dexter travelled to the region, announced a program to subsidize wood-cutting and said his government would help promote the mill products. He also said he was willing to go to the Ohio headquarters of NewPage to see if there was anything that could be done to keep the operation going.

But casting a gloomy and cautionary shadow over the process is the history of dead-end government assistance. Although there have been notable successes, there have also been many failures.

John DeMont, a business writer for the Halifax Chronicle-Herald, noted in Thursday’s paper that “the province’s past ... is littered with the corpses of businesses started by faraway owners and then abandoned once the government money ran out.”